Four Misunderstandings Relating to the Views That Anti-corruption Drive Is Harmful to Economic Growth(No.167, 2016)

2017-01-03

By Shi Shujie, Research Department of Development Strategy and Regional Economy, DRC

Research Report No.167, 2016 (Total 5050) 2016-12-8

Abstract: Four misunderstandings are related to the views that anti-corruption drive might drag down the economic growth. The first misunderstanding lies in the underestimation of the real cost of corruption, believing the loss caused by corruption is simply equivalent to the number of money from corruption and bribery, while ignoring the features of its adverse externalities including increased transaction costs, resource mismatch, and inhibited technological innovation. The second misunderstanding is the misjudgment about corruption’s impact on efficiency. It is confused about the parasitic relationship and causal relationship between corruption and economic growth, failing to observe the fact from the perspective of the modernization history and the dynamic economic evolution. The third misunderstanding is the exaggeration of the impact of anti-corruption on economy, holding that anti-corruption drive in the new era has slowed down economic growth. In fact, the temporary downturn economic performance is due to the evolution of development stages and the lagged impact of the transformation of economic development mode. The last misunderstanding is the unawareness of the urgency of anti-corruption. It does not recognize that corruption is already at the edge of explosive expansion, and it has become the major resistance to the development of new growth impetus and the comprehensive deepening of reform during the process of modernization.